Texas Medical Board investigates alleged surgeon kickbacks for referrals

The Texas Medical Board recently sanctioned an Austin neurosurgeon for what it characterized as misleading patients and violating federal anti-kickback laws by referring them to a company in which he had a financial interest.

The dispute arose from the neurosurgeon referring patients to a neurodiagnostic company for neuromonitoring services, without disclosing that he had a financial interest, as a manager, in the company.

What is neuromonitoring?

Neuromonitoring, also called intraoperative neurophysiological monitoring, is a non-invasive technique to monitor electrophysiology status during operation, which may allow identification of problems or complications that would otherwise go unnoticed. Typical neuromonitoring methods include electroencephalography (EEG), electromyography (EMG), and evoked potentials, all of which are monitored using sophisticated software.

Texas Medical Board investigation

The Board reviewed the medical records of six of the Austin neurosurgeon’s patients, including the chart of a woman who was billed $80,000 for neuromonitoring charges that were not covered by her health insurance company. Another patient’s insurance company was billed $128,211 for surgery and technical services.

Cutting to the chase, the Austin neurosurgeon was referring his patients to his own company for expensive neuromonitoring services during procedures that he performed. Thus, the neurosurgeon would be able to profit from his own services, and could also profit indirectly from his ties to the neuromonitoring company.

The Board felt that this referral arrangement—where the doctor made referrals without telling his patients about his financial interest –was unprofessional and unethical, while other physicians claim that the practice is common.

In that the amount of money doctors can make from neuromonitoring “kickbacks” depend on the type of health insurance the patient has, I was not surprised to see that insurance companies, like Aetna, come out in favor of the Board action. Paul Weller, senior counsel for Aetna, said, “I hope this is a sign the various regulatory agencies will aggressively continue to prosecute schemes that are improper or fraudulent.”

How medical referrals work

In my experience as a Houston, Texas medical malpractice attorney, I have seen all kinds of financial relationships between physicians and related care providers. Any time a prescribing doctor has a financial interest in making a referral, it can create suspicion or doubt as to whether the referral was needed in the first place. Here are some of the common financial relationships that I have seen from cases that I have handled.

I think it is appropriate to start with physician-owned hospitals. Texas has more of these than any other state. Critics argue that physician-owned hospitals cherry-pick patients, based on the need for specialized, expensive, and highly-profitable treatments.

There is a similar situation when it comes to surgical facilities. Until recent years, almost all surgeries occurred in hospital-based operating rooms. With the ever-changing insurance, Medicare, and Medicaid reimbursement rates, physicians began to see that having their own facilities to house surgical procedures was a new and lucrative opportunity. Now, many surgeons and practice groups have their own surgical facilities, and keep the facility profit that used to go to hospitals.

A final area that I would mention is procedure or study labs. Cardiologists used to order echocardiograms, interventional cardiology procedures, and cardiac catheterizations to be performed in a hospital. Now, many cardiologists and practice groups have their own labs, where they can perform them, and then keep the facility profit that would otherwise go to a hospital.

What you can do

While there is nothing inherently wrong with having procedures done in a surgical facility or physician-owned lab, I agree with the Texas Medical Board that providers should disclose any financial interest that they have when making a referral. Only then can a patient truly understand the risks and benefits, enabling him or her to provide informed consent to proceed.

In my opinion, the gold standard for surgeries, including bariatric and weight-loss procedures, as well as invasive testing, like cardiac catheterizations, is a hospital setting. Hospitals should be fully-staffed with multiple healthcare providers and specialties to handle any emergency. On the other hand, most surgical centers or labs are not staffed with personnel to handle many complications or emergencies.

I have handled a number of cases where patients were seriously injured or died as a result of complications that happened in a surgical center, resulting in a delay in treatment while they were emergently transferred to a hospital.

If you or someone you care for has been seriously injured as a result of medical negligence, call Painter Law Firm, in Houston, Texas, at 281-580-8800, for a free consultation about your potential case.


Robert Painter is a medical malpractice and wrongful death lawyer at Painter Law Firm PLLC, in Houston, Texas. He represents patients and their families in lawsuits against hospitals, surgical centers, doctors, surgeons, and other healthcare providers. He is a former hospital administrator who focuses his law practice on medical negligence matters.

Robert Painter
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Robert Painter

Robert Painter is an award-winning medical malpractice attorney at Painter Law Firm Medical Malpractice Attorneys in Houston, Texas. He is a former hospital administrator who represents patients and family members in medical negligence and wrongful death lawsuits all over Texas. Contact him for a free consultation and strategy session by calling 281-580-8800 or emailing him right now.